Sunday, February 28, 2016

Warren Buffett's annual letter to shareholders, written in a year after his stock's performance continues to be an embarrassment, suggests that the average American has a great economic future. Why? Because our past economic performance is so great.

But that's just the point. Past economic growth in the US was the envy of the world. That is no longer true. The American middle class has consistently lost ground over the past twenty years mainly because of the dramatic increases in government rules and regulations and the incredible growth of employer mandates. In the long run, employer mandates, such as family leave, litigation rights, health care, etc. come right out of the pocket of employees, not employers. This is the single most important reason the middle class has lost ground.

So what has Buffett contributed to this discussion -- mostly an amazing arrogance and hypocrisy. He laments his inability to pay a tax rate equivalent to that paid by his secretary. That's strange. He has a perfect right to pay higher taxes in order to equalize the rate paid between himself and his secretary. Why doesn't he? The only conceivable answer is personal greed. Nothing else can possibly account for the fact that he doesn't mail in higher tax payments, which are perfectly legal. Indeed, the tax forms have a line that enables folks like Buffet to pay more in tax if they like. He just doesn't choose to pay it. Some folks actually do send in more taxes than they owe, knowingly , but not Warren Buffett.

As for his optimism about America's future, one has to admit that Buffett's personal future looks great. At last count, Buffett's bathtub could be filled with $ 65 billion and not exhaust his personal fortune. As for the average American, Buffett and his allies whose policies have created economic stagnation, have all but guaranteed declining real income as the future for the average American. The past was great for the average American, but Buffett and his allies have made sure that only Buffett and his allies will have a great future. Everyone else will have to scramble for scraps in the stagnant economy of today and into the future.

Saturday, February 27, 2016

GDP for the fourth quarter of 2015 was revised up to 1 percent, as analysts and politicians cheered the upward revision. Given how GDP is estimated, it wouldn't be very surprising if actual GDP declined during the fourth quarter. Announced GDP is always based upon a relatively small sample of the country's economic activities. That's why the revisions are so big. A few items in the sample can change and make a big, big difference in the final number.

But, the truth is that actual GDP growth is not much different than zero. That's what the "one percent" number means. This is an annualized number, so even the estimate is for 0.25 percent GDP growth in the fourth quarter -- barely a pulse.

Economists who work for the government think this is great. I suppose it is a better outcome than that achieved by Venezuela. Beyond that comparison, it isn't clear why anyone thinks this kind of economic growth is great, given historical numbers closer to four percent and post-recession numbers in the high single digits. There has never been an economic recovery in America that was this slow. Things have definitely changed.

Meanwhile, most economists are arguing for minor tweaks in monetary or fiscal policy to spur economic growth. All this shows is that there is not much left of objective science in macroeconomics. The problem with the American economy and the European economy has nothing to do with "macroeconomics" and cannot be fixed with policy tweaking.

Janet Yellen and the Fed are irrelevant and so is infrastructure spending, tax cuts, and on and on. These policies cannot rescue an economy whose politicians (and media) have demonized businesses and regulated most of America's economic entities to the point of frigidity or extinction. Not much economic growth can ever take place in the current regulatory environment.

Bernie Sanders' candidacy is the ultimate statement of much of what has happened to the once vigorous American economy. For Sanders to say that "Wall Street's business model is based on fraud" is simply another way of saying that free markets are based on fraud. Sanders and now Clinton seem determined to destroy what little is left of America's free markets -- indeed, not much is left to destroy. That's why there is no economic growth and there is none to look forward to in the future.

This is as good as it gets, as Jack Nicholson famously opined. The golden goose of American prosperity has been killed and is not going to revive anytime soon.

None of this will impact the wealthy. Sander's idea of increasing income tax rates will have no effect on Buffett or Clinton and Gore or Pelosi or any other super wealthy person. Wealthy people don't draw their income from wages and salaries like ordinary folk. Wealthy folks can choose whether or not to have taxable income and, if rates are raised, wealthy folks will show lower taxable income. Conceivably Buffett need not pay any taxes at all for the rest of his life. All he has to do is borrow the money to live on, from year-to-year, and pay no taxes at all. He might not even have to file a tax return. So, naturally, Buffett and other wealthy leftists don't care if income tax rates are raised to 100 percent or more. It doesn't affect them.

But ordinary folks cannot escape the tax man. They don't have Buffett's wealth that enables him to maneuver away from the tax man. They are stuck. Not only does the average American pay income taxes but he is stuck with paying the most regressive tax in America -- the social security payroll tax, which amounts to 15 percent flat tax on all working income (this includes the 7.5 percent that the employer pays, which otherwise would be income to the working American).

With massive regulations on businesses, massive taxes on ordinary citizens (non-wealthy citizens), it is hard to see how the economy ever gets out of the mud. So, maybe the reason that Obama and Buffett and other elite Americans are pleased with one percent growth is that they have theirs already and they don't need economic growth.

But, the average American needs strong levels of economic growth just to tread water economically.

Unfortunately, one percent is as good as it gets or will get. Look for the middle class to continue to lose ground, while Buffett, Obama, Clinton, Gore, Pelosi and Sanders thrive in luxury.

Thursday, February 25, 2016

The Economic Innovation Group report discussed in today's NY Times points out that the wealth and income gaps in the US have consistently widened since the 2008 recession. This should come as no surprise.

Check out the pay scales of government employees. They have risen dramatically since 2008. Cloistered, quasi-government, institutions such as colleges and universities now pay low seven figure salaries to their top administrators when the same administrative positions barely paid low six figures fifteen years ago. Virtually everyone whose life depends upon the government is doing much, much better than they were doing in 2008 and those at the bottom of the economic pile have made zero progress.

This is what happens when merit no longer determines who gets what. The Gores and Clintons were doing reasonably well before 2008. But, after 2008, they went from single figure millionaires to centillionaires, worth well over 100 million dollars. How did they "merit" all that money? The answer: they didn't. Merit has been replaced by government largesse.

When Hillary Clinton spoke at Berkeley and was paid $ 300,000 for a two hour talk, unsuspecting taxpayers were paying the freight. That wasn't a market transaction. That was a government handout to a very wealthy person. No one attending the Clinton speech paid anything at all. Poor taxpayers, who weren't in attendance and had no idea they were footing this nonsense, were stuck with the bill.

And, so it goes.

Once the government determines who gets what, then the rich get richer and the poor stagnate. That's what has been going on since the Obama folks got into office and it will continue as long as government picks the winners and losers. Only the return of merit-based compensation can provide hope for lower and middle incomes, who don't have a friend in government orchestrating $ 300,000 paydays for a two hour speech to a bunch of college kids.

Tuesday, February 23, 2016

There is a very insightful article in today's Washington Post about the plight of "activists" at Brown University. The complaint, by "activists," is they cannot do their schoolwork because they are too busy being "activists."

None of these "activists" are paying their own way. Either their wealthy parents are providing the funding are they are on a free ride with their tuition provided free of charge. Given that, you wonder why such students have any incentive at all to go to class, study or do anything productive. Folks who really need the education are not "activists." They are, in fact, far too busy to engage in "activist" activities. Getting an education is serious business and takes serious effort. It's not going to happen if one devotes oneself to outside activities.

The problem is, of course, that many professors are "activists" and actively (no pun intended) encourage students in the direction of "activism," to the neglect of their studies. Why not? It is so much more fun.

Those who think taxpayers should fund higher education should take a look at this article. It shows that large number of students and faculty think Americans should provide the funding for students to act out their (naive) political view and not pursue an education. Why should taxpayers fund this nonsense. The simple and obvious answer is that the taxpayer should not pay one thin dime for any of this.

If students paid for their own education, it would be cheaper and they would be much more serious students. If the government continues to fund all of this, as it does now, American higher education will continue to drift toward increasing political action and educational irrelevance.

You would think the example of Greece would get folks attention. Apparently, the White House is oblivious. If adopted, the Obama budget, submitted last week to Congress, would put the US on a path to surpass Greece in debt-to-GDP ratio within a generation, even if Greece's situation deteriorates.

Meanwhile, the two aspirants in Obama's party who are vying to succeed him make Obama out to be a piker. They would bankrupt the US at a much, much faster pace than Obama. Clinton and Sanders are not looking at Greece as the future; they are looking at Venezuela.

The simple truth is that medicare alone, without considering social security, medicaid, free this, free that, will bankrupt the US within the next quarter century. Nothing else is required. All the pipe dreams about dealing with global warming, free tuition, and on and on have no room in future budgets since medicare will consume all of the US resources withing the lifetime of the current millennial generation.

As for infrastructure and things like that -- all much needed -- there is simply no way to provide the funding for anything except medicare...period. That's the hard, cold truth and it is simply a question of arithmetic.

If by some miracle health care spending by the government could be completely scrapped (with horrendous implications for the elderly and the poor), social security and unfunded public employee retirement systems, by themselves, are on track to consume the entire GDP with the next forty years.

There just isn't any room for anything else.

That's what makes the Clinton-Sanders debates surreal. There are talking about a world that is mathematically impossible.

As for education, criminal justice, national defense, infrastructure -- forget it. There is just no room for any of that. Increasingly, these functions will be abandoned in the US to make room for the exploding entitlements that will reduce the US to a status somewhere between Greece and Venezuela. It's just a matter of time and arithmetic.

Friday, February 19, 2016

The small country of Japan was the biggest of the post-World War II miracles. Even today, Japan has the third largest economy in the world and only recently ceded the second spot to China.

But, for the last 25 years, Japan has had essentially no economic growth. This is truly an amazing reversal of fortune, because post-World War II Japan had the fastest economic growth rates in the world. What happened? The welfare state happened. And Japan grew older.

Japan's population is falling, which is true for every developed country in the world, if one ignores immigration. Japan's population is aging, which is also true for every developed country in the world.

The problem with the welfare state is that the vast bulk of the benefits accrue to old folks (that's why young folks vote for Bernie and old folks vote for Hillary). The welfare state is inevitably accompanied by massive new restrictions on business and a growing contempt for the capitalist ethic. Everyone wants and is promised free stuff and fewer and fewer are left to provide all of the free stuff that has been promised.

For a long time, Japan and the rest of the world had relatively few old folks, so the welfare state appeared affordable. Now, the developed world is aging and it is becoming increasing obvious that the welfare state is not even close to being affordable -- in Japan, the US, Europe or anywhere else.

The result has been the dramatic expansion in sovereign debt loads worldwide, but especially in Japan, Europe and the US. These soaring debt levels will soon accelerate to levels never before contemplated. The end result is obvious. The bankruptcy of the welfare state and the failure to produce the benefits promised to future generations of old folks, who will be left to fend for themselves. This is what is increasingly happening in modern Japan.

Eventually the hollow promises of leftist political leaders lead to the beggary of their elderly populations. That promise is still mostly ahead of us, but it is coming and Japan is beginning to show the early stages.

By promising an elaborate system of health care and income maintenance for the elderly, the elderly lose the incentive to provide for themselves for their future needs. When the promise turns out to be a false promise, the elderly are left with nothing, exactly at the time that their health care needs and income needs are paramount.

This is the lesson of Japan. The Clinton-Sanders voters are setting up America's elderly for a cruel fate.

Tuesday, February 16, 2016

President Obama spoke today about climate change as if everyone should buy in to the solution that he and world leaders propose.

It is worth pausing and thinking about the implications for the average American living in a world of inconsequential economic growth.

What the President proposes is a dramatic reduction in the living standards of the average American (not in the living standards of Obama, Hillary, Buffett, Kerry, etc....they will still live high on the hog). But, the average America's standard of living will be cut by well over half if the President and his world leader friends get their way.

Is it any wonder that before we take America back to the 19th century economy, we pause to find out if there is any substance to the Obama version of climate change (otherwise known as global warming).

The argument is that increased CO-2 levels create a greenhouse effect in the upper atmostphere that causes warming (and now, since warming is not occurring, causes increased weather volatility (also not substantiated by any significant empirical evidence)).

In the Cambrian age, CO-2 levels were 15 times what they are today with no appreciable impact on temperatures or weather volatility. CO-2 levels and temperature and weather patterns have a great deal of variation over the long history of the earth. No apparent pattern in this voluminous data has yet to be discerned.

So the rush to the poorhouse for the average American, while Obama, Clinton, Kerry, Buffett, Schumer, Warren look gleefully on from their penthouses, is probably not in the cards regardless of how much some former community organizer thinks that climate change (whatever that may mean) is indisputable science.

But, at the very least, Obama and his cohorts should level with the American people and tell them that he plans to reduce them to beggary to satisfy his ego and the mystical notion of climate change.

Monday, February 15, 2016

Textbook macroeconomic policy is failing, everywhere. Japan is the clearest example. GDP has fallen four of the last seven quarters during an orgy of quantitative easing, negative interest rates, increased government spending -- all things that have simply made matters worse.

The absurd idea that the harmful effects of excessive government regulation and interference in the private sector can be undone by macro policy is a theme echoed by policymakers in Europe and the US. It hasn't worked anywhere and Japan is perhaps the clearest test case, but Europe and the US are pretty good examples as well.

You cannot effectively outlaw private, free market activity and expect your economy to thrive because you are tweaking central bank balance sheets or adjusting tax and spending levels. People need the freedom to start new businesses, expand old businesses, and to deploy capital and hire labor without a mountain of restrictions, mandates, penalties, and government interference.

We have passed a critical point in the large developed economies. Government interference and mandates have reached the level that inhibits economic growth. Japan's economy is contracting, Europe's has stalled for a decade, now the US is entering European stagnation mode. The end game will be the situation that Japan finds itself in -- a contracting GDP.

Saturday, February 13, 2016

The idea that declining stock prices can adversely affect GDP is not a topic discussed in a University classroom. Asset prices live in their own world in academia and do not interact with the real economy. However....

The recent stock sell off seems to have changed the mood. If folks get gloomy because their stock holdings are losing value, does that affect consumer decisions and business decisions. If so, how?

This issue arose in 2008. Bank stocks collapsed even though their balance sheets, as we now know, weren't really deteriorating. Instead, a lack of confidence in the repo market froze out Bear Stearns and then Lehman Brothers and then boom. It was essentially a lack of confidence that led to a run on the bank.

The proper corrective, which the market would have happily supplied after Lehman, Goldman, Morgan Stanley, perhaps Citibank declared bankruptcy, was for the new owners of Lehman, Goldman, MS, and Citi -- the bondholders -- to figure out some sort of emergency backing facility in the event of a failure of confidence in the repo market.

Instead of letting the market deal with this, the politicians entered the fray and Dodd-Frank and massive regulatory encroachment put the financial system is a box from which it cannot recover. It was equivalent to declaring that in order to stamp out traffic accidents, you outlawed all motor vehicles. That did the trick. But, no doubt, there are side effects.

Now, we are there again. A market decline is scaring folks in the real sector -- not just in America, but globally. When this happens, things like the anti-capitalist political regimes in the US and Europe begin to be exposed and the economy begins to falter. That's what is happening.

The euphoria of rising stock markets is gone and not coming back anytime soon. The underlying economics of stagnant economic growth do not suggest that assets are becoming more valuable. They are becoming less valuable.

Rising stock prices and a booming oil industry provided what little stimulus the economy has had for the past seven years. So much for that.

Now, the harsh realities of over-regulation, deficit spending out of control, a hobbled financial sector and a Hugo-Chavez political dynamic are taking over.

Today's Wall Street Journal has an update on Venezuela that is well worth the read. It spells out what happens to a country when everything is free and the government dictates what happens in the private sector.

Most Venezuelans are on the brink of starvation. Crime is out of control. Ordinary citizens are helpless. And, of course, everything is free. The Hugo Chavez rhetoric demonizing the wealthy and offering free everything to the citizens of Venezuela has borne fruit. Obama went out of his way to shake Chavez' hand when he had the opportunity -- no doubt Chavez was one of his heroes. The country is collapsing.

This is the land that Obama and Bernie and Hillary want for us. Check it out.

Friday, February 12, 2016

Listening to last night's Democratic debate between Hillary Clinton and Bernie Sanders was an amazing experience. It was, in most respects, a recounting of the Hugo Chavez agenda that, for the last decade and a half, has played out in Venezuela. There wasn't any discussion at all about how or even why an economy should grow. There was an implicit assumption that economic growth was over and it was now time to put a pitchfork to those who ended up with the biggest share and appoint Clinton and/or Sanders to preside over the spoils so obtained.

What passed for an economic agenda by either candidate was visceral hatred for successful Americans and unlimited "free stuff" for everyone else. Sanders has proposed $ 38 trillion in additional annual spending in an economy with $ 19 trillion in GDP and current government spending of over $ 19 trillion. That's right -- $ 57 trillion in government spending in an economy with $ 19 trillion of total output. Hillary is right behind him. According to both candidates, "the rich" are going to make up the gap -- apparently they believe the rich have income equal to triple the nation's annual GDP.

This is so similar to the Hugo Chavez rhetoric, that it's scary. It took Chavez only a decade and a half to destroy Venezuela, where most of its citizens now scavenge the countryside for food, in a country that was once the economic marvel of South America. It doesn't really take very long to crush the free market, if you can convince people that government is the answer. You wonder, if elected, how long it would take Clinton or Sanders to reduce the once proud American nation to a sniveling, swarming citizenry groveling for its next meal. Chavez has certainly provided the blueprint and Clinton and Sanders seem determined to pursue that route.

Meanwhile, in what's left of America's tattered free markets, the stock market is getting crushed while all eyes are on the Wizard of Oz to see what he/she will do next (think Federal Reserve). There is no evidence in any country in any era, that the central bank made any real difference for good or evil in the real economy. While central banks might impact inflation from time to time, their impact on the economy as a whole is similar to that of the Wizard of Oz -- lots of conversation, no substance.

That no businesses want to spend, invest, hire employees seems the greatest of mysteries to financial commentators. Outlawing lending, investing, trading, etc. matters. Dodd-Frank and the accompanying regulatory regime have done their job. They have destroyed the American financial industry. Without a financial sector, economic growth in the US is a non-starter. Even the absurd target of 2 percent growth is no longer achievable for an economy that was routinely used to over 4 percent annual growth in its history.

Meanwhile the European and Japanese central banks are charging interest on reserves that banks hold. Why is this absurd policy in place? To punish banks who do not make commercial loans! That's with their left hand. With their right hand, European regulators are admonishing the banks to add more capital to back their existing loan portfolio -- thereby implying that the banks should not expand commercial loans. Great policy. Damned if you, damned if you don't. No wonder Deutsche Bank is hitting the skids.

Western banks, at this point, are simply tentacles of the ever-expanding government apparatus both in Europe and in the US. No local bank lender in the US has any real authority to make loans today. They look to Washington regulators as to who they can loan to, who they must loan to, and what the terms and conditions of such loans are to be. If this isn't the old Chinese/Soviet model, what is?

We are in the early stages of the Obama-Clinton-Sanders revolution. If you want to cut to the endgame, check in on modern Venezuela to see the final act. Once individuals are no longer free to make their own decisions, the possibility of sustained economic growth is over. Bureaucrats have never created economic growth or prosperity, except, for a while, and then only for themselves.

Wednesday, February 10, 2016

The pundits keep (trump)eting the idea that the two front-runners in the presidential race are draining the same swamp. Wrong. Trump and Sanders are appealing to fundamentally different yearnings.

Donald Trump is looking back. He has the 1950s, 1960s, and 1980s in his rear view vision: a simpler world with a dramatically better economy. People actually received real health care, their incomes were rising, their futures and that of their children were bright. (Not to mention that the US commanded the respect of other nations). None of this is true anymore. While the US is wealthier today than in the earlier bygone eras, there is no vibrancy to today's economy and the life chances of a majority of Americans are significantly diminished from the life chances of earlier generations. Very few Americans think the future for their children will be better than the present. And they are right. A growing economy and opportunities for lower and middle income families are ancient history.

Bernie Sanders has an entirely different point of view. Sanders believes that America is, and always has been, an unfair place. He thinks that rich people run America and imprison the rest of us. Rich people, in Sanders' view, are bad people with bad motives. His statement that "the business model of Wall Street is based upon fraud" is telling. One suspects that Bernie sees all businesses as based upon fraud. The fraud is the free market, which Bernie, who chose to take his honeymoon in Moscow when the communists were still firmly in power, would like to dismantle. "Free this" and "free that" is just another way of saying: "lets replace the free market with a few well-intention plutocrats like me and we will distribute society's production in a fair and equitable manner." This is the fixed-pie concept. There is only so much to go around -- economic growth is a non-starter of no interest to Bernie -- so lets divvy everything up the way I want it divvied up. Forget the free market. I know best what should be produced and who it should be given to. That's the Bernie message.

For Trump's vision to be a reality, there would have to be a return to free market economics. It is by no means clear that he understands that. What he seems to have in common with Bernie is the "strong man" formulation. "I know best. Trust me." That is what Trump and Sanders seem to have in common. Sanders would prefer something along the lines of the old Soviet state, except Sanders seems to believe in "benevolent" state dictatorships. Other than Singapore, there appear to be no examples of benevolent dictators in the long history of the world, so Sanders vision of compulsion probably would, in practice, be the same compulsion that one saw in the Soviet Union, Cuba, Venezuela, Iran, and North Korea. Good intentions are rarely borne out when power is involved.

Free markets and free politics are the ticket to a good future, not "I know what's best for you." The "I know what's best for you" view always ends in dictatorship and oppression. If Trump and/or Sanders are ultimately successful, the endgame would likely be the same for either. But, they are certainly not tapping the same well.

Tuesday, February 9, 2016

Excessive regulation over many decades culminating in the coup-de-grace -- the Dodd-Frank legislation has destroyed the bank business model.

Note the stock price collapse of the big money-center banks that is currently in progress. Commercial lending, trading, prime brokerage, and market making are businesses destined to disappear in a sea of red ink. The new army of compliance officers -- the only part of commercial and investment banking that is growing -- has to be paid. That doesn't leave much left for bank profitability.

So, what will the banks do? We are already seeing what they will do. They are moving to the "fee" business model, charging for bank transactions -- check writing, transfer, wires, and so forth. That model won't work. Bank overhead is far too high. So, the banks are rushing to expand wealth management which, thus far, has not been made illegal by regulators. But, even wealth management will fall victim to the regulators' hatchets in time.

Take a good long look at your commercial and/or investment bank. It will be unrecognizable in a few years. As for profitability, just take a look at how their stock prices are faring so far in 2016.

Monday, February 8, 2016

When the old Soviet Union fell and China began to open itself to the beginnings of free markets, it was widely thought that capitalism had triumphed over state-run economies. Guess what? The tide of history went the opposite direction.

After 1990, the big, successful western economies began to accelerate their way along the path to the dustbin of history. It is no accident that the only country in Europe that seems to believe in free markets today is Poland, having endured a century of state-run economics.

It is interesting watching the political debate taking place between Clinton and Sanders. They seem to outdo one another in urging the end of free markets. Not a word comes from either mouth that doesn't propose some specific way of removing free market policies and replacing the American democracy with a bureaucratic overlord system, not far removed from the way the old Soviet Union was organized.

Clinton and Sanders are typical of the favored elite that increasingly dominate American political and social life. They are both incredibly wealthy, at least as compared to average Americans (even Sanders!). Neither seem to believe that the average person is capable of making their own decisions. They both believe the state should direct investment not the private sector. In many ways, both would have been comfortable in the old Chinese government of the pre-1990s.

No wonder both dislike post-1990 China, a country that has advanced more of its citizens into the middle class by using free markets than any country in the history of the world. For this, they have nothing but contempt.

Like the Democratic combatants, most of the Republican combatants are right there beside them on most of these issues. Of the Republican candidates, not a single one has failed to speak out against at least one aspect of the free market, including Rand Paul (think ethanol). None of the Republican candidates have made free market economics the centerpiece of their campaign. None seem concerned about the economic stagnation that is now ubiquitous in the western world.

For the poor and lower income, the rout of capitalism portends declining opportunities and further reduced living standards. Only free markets help poor people. Government simply keeps the poor in a virtual prison constructed with government welfare programs.

When the old Soviet Union fell, it looked like, at last, the least fortunate in our society would be cut a break. But, the politicians will fight mightily to preserve their hegemony over ordinary citizens, as the elite move around gracefully in their limousines and gulfstreams, all the while decrying inequality and Wall Street.

Sunday, February 7, 2016

The simple idea that people should purchase whatever health care insurance they need without interference from government has been overwhelmed by the idea that a handful of bureaucrats knows what's best for every citizen in the United States. You are not free to choose even if you know what you are doing.

Now, comes the part that they didn't tell you about. Two articles in today's NYTimes are enlightening. Both articles are about the "high-deductibles" in most Obamacare insurance policies. The practical impact is that most people now have insurance but cannot afford, and are increasingly not getting, health care.

The big lie was that your health care costs would fall. For the average American, health care costs are now astronomical, because of high-deductibles that can range as high as $ 10,000 per year in out-of-pocket costs before the insurance kicks in. For a family with the average family income in America, approximately $ 55,000 per year, this means you have to do without health care unless your problems are truly catastrophic.

One of the NYTimes articles notes that deductibles are rising much faster than wages in America, so the unaffordability problem is going to get a lot worse.

You have health insurance; you just don't have health care. I guess that is a victory of sorts -- certainly for Obama. But Obama never really cared whether anyone had adequate health care or not. It was always about health insurance coverage, not health care.

How about letting people buy whatever health insurance they want without one iota of interference from the government? And, let insurance companies design insurance products that people want and need -- not what Obama and his gang think they need.

Saturday, February 6, 2016

Bernie Sanders has a novel idea. Why should affluent people pay for their college tuition? Let's make it free. The affluent need a break! Thanks Bernie. Hillary should soon endorse this brilliant scam as well.

Who goes to college? Everyone except poor folks and lower and middle income folks. Why shouldn't poorer folks shoulder the burden for their wealthier friends? That's what Bernie proposes.

Bernie says he will tax the rich, but that is not how this scam will turn out (they never do!). If tuition were free, it would be like the public schools, where property taxes, already burdening lower to middle income citizens provide the funding. The same would prove true for free colleges.

Will the poor and low income kids start heading to these free schools? No. They won't have any hope or, or even the remotest interest in, attending college. Absent school choice or some other major reform, the poor and lower middle income are consigned to schools that provide little or no education and are mainly in existence for the sole purpose of providing income to "teachers," many of whom have no idea how to teach and not much interest. These schools are mostly creatures of the powerful teachers unions and are not designed or intended to educate anyone.

So the same folks who now attend college -- the relatively affluent, like Bernie and Hillary -- will be the same folks who attend college under the Bernie/Hillary plan. The only difference is that poor people and lower mcome families will begin to should more of the costs, for schools they are not ever likely to attend.

None of this, of course, gives pause to Bernie so long as 19 year old, affluent, college kids hold up signs at Bernie's rallies, demanding implicitly that poor folks start paying more of the tab for these kids college escapades.